Retail Supplier To Pay $1 Million, Extend In-Person Marketing, Telemarketing Suspension For Six Months, Under Settlement With PUC Staff

July 27, 2020

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Reporting by Paul Ring • ring@energychoicematters.com

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Verde Energy USA, Inc. would pay $1 million and extend a moratorium on in-person marketing and telemarketing in Pennsylvania for six months under a settlement with the Pennsylvania PUC's Bureau of Investigation and Enforcement ('I&E') to resolve alleged instances of slamming and alleged misleading and deceptive conduct

The alleged behavior which led to a complaint filed by I&E against Verde were detailed in our prior story on the complaint in January 2020 (click here)

I&E has originally been seeking, among other things, license revocation and a nearly $9 million fine.

In the original complaint, I&E alleged that the "misleading and deceptive telemarketing conduct" by Verde and/or its agents included but was not limited to the following (quoted as alleged by I&E):

• "The Verde agent or agents misrepresented a relationship with PPL or other electric generation suppliers that does not exist, such as: i) Representing that Verde is affiliated or a part of PPL; or ii) Representing that Verde is affiliated with or a part of other, unrelated electric generation suppliers."

• "Representing that the customer's current electric generation supplier was going out of business, bankrupt, or not providing services in Pennsylvania[]"

I&E had alleged that Verde slammed 179 customers in the PPL service territory. In the original complaint, I&E had alleged that, "Of grave concern, three (3) of the unauthorized switches involved Verde enrolling a customer who was deceased."

Other allegations from I&E in the complaint included, as described in a January 2020 PUC news release, the following alleged behavior:

• 'Spoofing' phone numbers on telemarketing calls to falsely identify the call as coming from other utilities or local telephone numbers.

• Threatening to disconnect customers’ services and/or using private customer information to falsely report power outages or falsely submit requests to disconnect service.

• Agents misrepresenting themselves as representatives or employees of a utility, including allegations that agents wore clothing or provided documents that included a utility logo.

• Falsely claiming to have been sent by a utility to check customers’ meters or rates/bills

• Claiming that customers’ current electric generation supplier was going out of business, bankrupt or not providing service.

• Representing that the customers’ current electric generation supplier was purchased by or merged with Verde.

• Misrepresenting that Verde is a discount program.

• Making misleading claims about potential savings.

The settlement would resolve I&E's complaint.

The settlement provides that none of the provisions in the settlement shall be considered or shall constitute an admission, a finding of any fact, or a finding of culpability on the part of Verde

In addition to a $1 million civil penalty, Verde, as part of the settlement, is to make a contribution of $75,000 to PPL’s hardship fund

Verde is to also refund to each customer identified in I&E's complaint, who was actually enrolled with Verde, a refund equal to their first two months of electricity supply charges, less any amounts previously refunded to that customer. For customers who allege unauthorized enrollment by Verde, and who were actually charged and paid early termination fees (ETF) to their prior supplier, Verde is to refund those ETFs, upon receipt of proof of payment by customer.

The settlement noted that Verde voluntarily ceased in-person marketing and telemarketing in Pennsylvania on or about February 6, 2020.

Under the settlement, Verde agrees to continue its moratorium on in-person marketing and telemarketing in Pennsylvania for an additional six months after Commission approval of this settlement or until May 31, 2021, whichever is earlier (Verde will remain subject to any emergency or similar orders prohibiting all EGSs from in-person marketing as applicable)

In addition, the settlement provides that, even after the expiration of the moratorium, Verde will not conduct any telemarketing or in-person marketing until the quality assurance measures discussed below have been fully implemented and Verde provides confirmation of such information to I&E in writing.

Furthermore, when Verde resumes telemarketing in Pennsylvania, the settlement provided that the company will restrict the number of telemarketing contacts to prospective customers, such that no prospective customer shall receive a contact from Verde more than three (3) times over any ninety (90) day period. This limitation can be modified by agreement of I&E upon request by Verde, if Verde demonstrates substantial compliance with the provisions of the settlement.

Additionally, when Verde resumes in-person marketing in Pennsylvania, it will utilize no more than one (1) in-person marketing vendor in any utility territory at a time. This limitation can be modified by agreement of I&E upon request by Verde, if Verde demonstrates substantial compliance with the provisions of the settlement.

The moratorium included in the settlement will not prevent Verde from enrolling new customers online or via the internet, and will not prevent Verde from contacting existing customers to renew their enrollment, or contacting customers by telephone based on inbound requests for information from prospective customers.

Under the settlement, Verde also has committed to developing and implementing a new sales quality assurance program which includes, as described by Verde in a statement filed with the PUC, "a detailed sales agent training program, clear restrictions on sales vendor activity, vendor screening, recording of telemarketing sales calls, a new sales verification system, a sales compliance and quality assurance monitoring program, new staffing commitments for compliance purposes, and ongoing reporting obligations."

Under the settlement, Verde shall record all telephonic communications between Pennsylvania customers and Verde’s customer service representatives and maintain such call recordings for a period of at least ninety (90) days.

Verde shall require its telemarketers to record all communications with residential and small business consumers in Pennsylvania that result in a sale. The Verde representative will record every call placed to potential customers (with proper notice of the call being recorded provided to the potential customer), "but will maintain a record all [sic] of calls that result in a sale." Verde has the discretion to not keep and maintain those calls which do not result in a sale, "unless if [sic] Verde decides to use such calls for quality and compliance assurance."

The settlement provides that Verde will implement a new Third-Party Verification ('TPV') platform which will include the following: (i) Ensure compliance with the applicable law by creating an internal audit system based on analytics; and (ii) Ensure that the TPV call center contains bilingual individuals who can accurately confirm the sale in the potential customer’s native or preferred language.

In a formal statement in support of the settlement filed with the PUC, Verde stated, "Verde recognizes the seriousness of the allegations set forth in the Complaint. The sales activity and customer interactions described in the Complaint were not committed by Verde employees or with their knowledge, involvement or approval. Rather, those allegations relate to the acts of third parties sales vendors. Nevertheless, Verde recognizes that the allegations implicate important vendor oversight concerns, and Verde is responsible for ensuring that its sales vendors comply will all applicable sales and marketing rules, regulations, orders and statutes. Therefore, as outlined in the Settlement Petition, Verde is committing to extensive reforms and new processes to ensure that when it resumes in-person marketing and telemarketing in Pennsylvania it is conducted in a fully compliant manner."

"With the new sales compliance program being implemented in connection with this Settlement, Verde intends to go far beyond minimum compliance with the applicable provisions of the Public Utility Code and Commissions’ regulations, orders, and decisions. Verde’s goal is to develop a best-in-class program that will set Verde apart as a leader in in marketing and compliance related matters," Verde said in the PUC filing

The Pennsylvania Office of Consumer Advocate opposes the settlement

"The OCA respectfully submits that the Commission should allow this matter to proceed so that the alleged violations can be assessed in greater detail and the reasonableness of the proposed remedies in the Settlement can be determined," the OCA said

Of note with respect to the OCA's opposition is that I&E alleged in the complaint that, "In addition to complaints received by customers, PPL identified 3,922 incidents where a Verde agent either attempted to or successfully accessed online customer accounts without the customer's consent or authorization."

In a statement filed with the PUC, Verde said of this allegation, "The Complaint also alleged the improper accessing of a large number of customer accounts by vendors acting on Verde’s behalf. However, while the allegations related to that matter are certainly troubling, there is little to no information about the issue in the Complaint or from the I&E’s investigation which justifies making Verde responsible for the unauthorized account access. I&E’s investigation materials indicate that the improper account access clearly seems to be the work of an unscrupulous actor who was working for multiple suppliers. Verde was unaware of these alleged actions and certainly did not authorize them."

However, OCA stated, "The allegations of the use of personal information to access customer accounts is one that the OCA has not heard of previously and raises significant issues and major unanswered questions including: which of Verde’s third-party vendors was responsible for this conduct; what investigation has been undertaken regarding this conduct; where did the allegedly affected customers’ personal information come from; was the conduct criminal in nature; what remedy was pursued by Verde; and what steps have been taken by Verde to prevent such conduct in the future. Any resolution of this Complaint would be far from satisfactory and complete without the OCA’s ability to fully explore these allegations as well as Verde’s management actions or inactions over the period in which the allegations occurred to monitor its third party vendors and to identify such improper conduct."

"The Settlement does not recognize that there remains a large deficiency of information surrounding the degree of mismanagement at Verde to lead to the alleged egregious conduct and adverse impact on many consumers as set forth in the I&E Complaint. Moreover, the settlement does not reflect the Commission’s zero-tolerance policy related to slamming, nor does it reflect a complete analysis of the harm that may have been incurred by customers across the Commonwealth, particularly those whose personal information may have been misused. Without a fair and complete examination of the degree of Verde’s mismanagement of its licensing obligations in Pennsylvania, the scope of the problem, the interactions with the third party vendor, and Verde’s prior enforcement history as well as that of its parent company, Spark Energy, the proposed Settlement cannot be found in the public interest," the OCA said

C-2020-3017229

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